Four future challenges in HR’s evolution

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In 1997, Dave Ulrich set a bombshell amongst the HR community by introducing the Ulrich business partner model. Almost 20 years on however and HR’s evolution continues bringing new questions up about where to go and how to adapt.

Norm Smallwood, co-founder and partner of The RBL Group with Dave Ulrich, talked to HC about what HR needs to do moving forward.

The first challenge, he said, was to truly understand business content.

“You’ve got to understand what the business is doing. It can’t be internally focused on HR. You have to understand business issues from a perspective of the business.”

Secondly, it is essential to look at the outcomes of strategic HR which has grown to include external areas such as finance, marketing and economics, he said.

“It’s about understanding those outcomes and the logic for why those outcomes are important. That’s the shift in values.”

This change has forced HR to focus on four factors that directly impact investor and customer confidence, Smallwood said. These include:

Delivering on earnings

Creating a clear, compelling business strategy

Aligning technical core competencies with business strategy

Aligning social and cultural capabilities to create uniqueness

The third step for HR would be to create a corporate structure designed to optimise the business as opposed to merely optimising HR, he said.

“HR organisational design – meaning the people we have, the culture we have, all of those things – should be designed to deliver value to the business based on these capabilities.

“The other organisational design issue for HR is to drive HR efficiencies through shared services and technology”

Ultimately, HR has two roles, Smallwood said. One of these is to drive efficient and the other to drive effectiveness and value.

“It’s probably 80/20. Eighty per cent of is driving efficiencies, 20% of it is driving these value kinds of issues but it’s really both.”

Lastly, HR will need to invest in the skills to be able to take all of these steps – building the key HR competencies lacking for the region.

“Some competencies make an HR person be individually effective and have credibility in the organisation while others drive business value.”

As an example, Smallwood pointed at the ‘credible activist’ – an individual people generally view as trustworthy and who can promote action based on that trust.

“That’s a competency that that drives really high levels of individual trust and engagement about that individual HR person. But it doesn’t have any impact on the business until you do something about it like build capabilities which create business value.”